Before purchasing a section to build a new home on, you should research the section and consider how its location could affect building costs. See our inspection and further research checklists at the bottom of this page.
Location and building costs
The location of your section can have a bearing on building costs. For example, your new section may have an amazing view, perched on a cliff overlooking the sea. But it will also be exposed to the wind, the risk of erosion or flooding, and the risk of corrosion to materials.
Houses exposed to high winds have to be designed appropriately, for example the building may need extra bracing and may attract a higher score on the weathertightness risk matrix.
Erosion and flooding
There is provision in the Building Act 2004 for the council to refuse to grant a building consent if the land is at risk of a natural hazard, such as erosion, flooding, subsidence, or slippage, or if the building work itself is likely to accelerate the problem. If the council decides that there is a risk from a natural hazard but the building work won’t worsen the problem, it may grant a building consent but must advise the Registrar-General of Land, who will note on the certificate of title that a building consent has been issued under section 72.
So take special care to check the certificate of title for any section 72 endorsements on the title which will alert you to the fact that the land is at risk of erosion, flooding or subsidence. Note, it may appear as a section 36 endorsement under the prior 1991 Building Act.
Insurance may also be a problem if the section has an erosion risk. The Earthquake Commission (EQC) insures against earthquake, natural landslip, volcanic eruption, hydrothermal activity, tsunami, and, in the case of residential land, a storm or flood; or fire caused by any of these. You are automatically covered by EQC insurance when you take out private insurance cover for your home or belongings and the EQC premium is built into the premium you pay your own insurance company.
However, subsidence is not covered by the EQC. So if you are buying a section with a risk of erosion or subsidence you may need to get extra private insurance cover for risks not covered by the EQC.
If the house is near the sea it will need to have corrosion-resistant features in the roofing, joinery and structural connectors. It may also need more frequent washing and painting after you’ve moved in.
Some of these problems can be offset by using adapted designs that suit the environment without being significantly more expensive. A good designer should be able to advise you on this. Their advice could influence your decision to buy the section or not.
If you are still keen, research the section in more detail.
Tip: Before you sign up to buy a section, it is very important to ask your architect or designer to check out the site for you - they can advise you if your ideas are workable given the shape and size of the section.
Certificate of title
The certificate of title (CT) will tell you the size and general shape of the section, who owns it and whether there are mortgages, leases, rights of way or other interests registered against the title.
It will also tell you whether the land is freehold or leasehold.
Getting a certificate of title
You can get a copy of the CT yourself or ask your lawyer, project manager or another search agent to get it for you.
There are many search agents available. Look in the Yellow Pages under Real Estate Agents, Property Management, Land Information, Resource Management, Document Services, Legal Agents, Lawyers, and Surveyors.
If you are doing the search yourself, you will need:
- the correct Land District - you can get this from the Land Information NZ (LINZ) website.
- You also need the CT number. Get this from the real estate agent, property developer, or go to a LINZ processing centre. (You will need the legal description of the property, e.g. Lot 1 DP 1234, which you can get off the rating records for that address).
Once you have the CT number, you can order a copy of the CT by:
- visiting a LINZ processing centre
- through the LINZ website,
- or you can post or fax in a request. A small fee is payable. You should get a copy of the CT within 36 hours.
Note that some councils require you to have a copy of the CT before you can apply for a LIM. This is to make sure you are researching the correct section. For example, if you give the street address for a vacant section that happens to be a cross lease, you may get a LIM for all the units that have already been built on the other parts of the cross lease.
Covenants and easements
Covenants and easements are restrictions and obligations on the use of the section. They are usually put on the title by the developer when the land is subdivided. But anyone - for example, a person selling off a back section subdivided from their own property – can impose covenants and easements to give themselves some control over the way the new section is used.
Examples of covenants are:
- Controls over the way houses are built, i.e. size, type of materials, even the plans and the time within which construction is to be completed. Also the type and size of fencing allowed.
- Restrictions against people operating a business from home.
- Restrictions on the types and numbers of pets.
- Height restrictions to protect views.
- Protection of trees or bush.
An example of an easement might be a right of way giving access to the back section, or a right to pipe water across one section to the other. It is important to know that you can’t usually build over whatever the easement is protecting. This could limit your use of the section.
Covenants and easements are recorded on the CT and continue even after you’ve built your house. Depending on what the covenant and easements impose, you need to know that:
- You can comply fully with the covenant or easement.
- The covenant applies equally to the other sections in the subdivision, and not just to you. For example, if height restrictions apply you’d want your neighbour to be subject to them too so that you don’t get overshadowed.
- The resale value of your property won’t be affected – covenants and easements stay on the title even when you sell.
Have your lawyer check the details for you as part of the title search.